Remote work, office space, retail—it all impacts the residential real estate industry.
The pandemic brought about change at lightning speed. I rounded up just a few of the studies that show some of the more significant changes that will impact real estate:
- Remote Work. A survey of more than 300 national employers by advisory firm Willis Towers Watson said that 30% of their employees will be working from home full-time in three years—up from 5% three years ago. A New York University study of 3.4 million workers found that at-home workers reported working an average of 26 extra hours a month. Global Workplace Analytics, in a survey of 1,388 people working from home, found that 80% said they would like to work from home three days a week or more, up from 27% before the pandemic.
- Accelerated Digitization. Peter Grant of The Wall Street Journal commented, “As retailers learn to operate without stores, business travelers without airplanes and workers without offices, much of what started out as a temporary expedient is likely to become permanent. In many ways, digitization is simply the next chapter of a process under way for a century: The dematerialization of the economy. As agriculture gave way to manufacturing and then services, the share of economic value derived from tangible material and muscle shrunk while the share derived from information and brains grew. Solar and wind power require no pipelines or tankers. Carvana has established that people will buy cars virtually.”
- Virtual Relationships. Joel Mokyr, an economic historian at Northwestern University said, “One of the most important and least appreciated roles is the great fake. It enables increasingly lifelike representations of some kind of reality through analog or digital mimicry, referred to as virtualization. One example is that the use of tools like Zoom seeks to recreate in virtual form the physical relations between bosses, employees and customers. However, Mokyr adds that “diminishing returns work here as well. We can mimic reality, but we are not digital creatures ourselves, and our evolutionary background will continue to demand physical experiences.”
Interestingly, many consumer brand companies also think some permanent changes have occurred and are betting on significant shifts in consumer purchases. Conagra Brands and Kraft Heinz, for example, are buying and upgrading equipment to make more at-home meals. Kimberly Clark is converting a plant from making tissue products from office use to home use lines. Proctor and Gamble is doing the same.
What Does This Mean for the Real Estate Industry?
You’ve heard all of this before, but it bears repeating. The move to expanded remote working is permanent for a significant share of the office-based workforce. This will cause a shift in where people can live regardless of where they work. This shift will cause more activity for housing sales in suburban, ex-urban and rural markets and potentially less activity in urban core areas.
A Shift Away From an Office-based Culture
For brokerage firms, it should mean a shift away from office-based cultures to more digitally interactive relationships. Most brokerage firms, Realtor® associations, coaches, and educators have learned that they can reach far more real estate professionals, far more frequently, and with rich content with a mixture of online interaction and in-person events.
The big challenge is how brokerage leaders can maintain, build or rebuild their cultures—moving from an office-based culture to a remote-based culture. Brokerage firms that built their businesses on in-person interactions and relationships will need to adapt to a new environment.
Technology Vital to Brokerage Functions
This is a no-brainer and was happening even before the pandemic. Technology will become vital to the functions of a brokerage firm. How agents interact with their customers, from CRM and virtual tours to online transaction processing, will all have to be enhanced for a brokerage to stay competitive and relevant. It also means using technology and information to recruit and develop agents and staff more effectively.
As Mokyr said, we are physical creatures, not digital, and in-person interaction will remain an integral part of how a business works. In residential brokerage, this will continue to be true more than in other fields.
Don’t kid yourself into thinking that it will go back to the way it was 10 to 20 years ago. Most agents and teams abandoned offices years ago when they found they could remotely work from their homes or the local coffee shop. While most home buyers won’t purchase without physically being in the homes they may want to buy, the numbers who will purchase remotely is going to grow to an unprecedented level. The pandemic accelerated changes that were already happening in the real estate industry. The idea of buying a home seen only through a virtual tour, while not mainstream, was accepted by many out-of-state or global homebuyers.
For brokers, flexibility and innovation with an eye on connective technologies and a healthy mix of in-person interaction should set you up for success in the coming year.
Steve Murray is a partner in RTC Consulting, a brokerage consulting, M&A and valuation service. He is also a senior adviser for HWMedia, the owner of REAL Trends content, rankings and more.